Newsmaker: The battle of the White House budget directors

REUTERS/Keith Bedford

On April 1, 118 guests crowded into a meeting room at the top of 3 Times Square to hear two high-profile financial authorities debate their widely differing views with Reuters Editor-at-Large Sir Harold Evans as moderator.

The debaters:

  • Peter Orszag, former director of the Office of Management and Budget for President Obama, and
  • David Stockman, who held the same position under President Ronald Reagan and has just published a book titled “The Great Deformation”.

The celebrity-studded audience included Edmund Phelps, 2006 winner of the Nobel Prize in Economics; Chris Anderson, the curator and owner of TED Conferences; financial leaders from Bank of America Merrill Lynch and ING; reporters from CNN Money, Financial Times, Newsweek DailyBeast, The Wall Street Journal and Vanity Fair. And let’s not forget Thomson Reuters CEO Jim Smith and Reuters Editor-in-Chief Steve Adler.

As Reuters noted in its coverage: “Two former budget chiefs who worked for presidents from opposing political parties said on Monday that the government should reduce military spending, scale back Social Security payments and end decade-old income tax cuts to reduce the federal deficit…Both also said the country would be well-served if better-off citizens paid more taxes and took smaller benefits from the government in their old age.”

However, their opinions were far apart on most issues. Stockman’s wish list includes a return to the gold standard and the abolishment of Social Security and Medicare; maintaining that government is the problem, he pointed to the unfettered 1890s and 1920s as periods when the economy performed especially well.

Orszag countered, “To argue that economic volatility is caused by the government is fundamentally wrong” and pointed to globalization as one factor in stagnant median family incomes. He said that fiscal austerity during recessions just “makes the situation worse” – to which Stockman replied, “We are broke.”

Check out a full replay or selected clips of the Newsmaker.

Also watch this Reuters video where billionaire investor Wilbur Ross says Stockman is wrong.